After a considerable period of waiting for the regulator to act, Beloy family-led Abra Mining and Industrial Corp., including its directors, officers, transfer agent, and certain stockholders, were slapped with P560 million in fines for unauthorized and fraudulent trading of unissued and unlisted shares from 2015 to 2019.
Citing a decision promulgated last 8 April, the Securities and Exchange Commission’s (SEC) Markets and Securities Regulation Department (MSRD) found Abra Mining guilty of violating Section 26 of the Securities Regulation Code (SRC), and Section 61 of the Revised Corporation Code (RCC).
Found liable were company president James Beloy; corporate secretary Amelia Beloy; directors Conde Claro Venus, Carmelo Rafael Tansengco, Premy Ann Beloy, and Joel Beloy; and former director Belinda Gaskell.
In a separate decision, the MSRD also found AR’s transfer agent, Asian Transfer and Registry Corporation, as well as its president Arline B. Adeva, corporate secretary Premy Ann, assistant corporate secretary Joseph Acuesta, and treasurer Joel, guilty of violating Sections 26 and 52.1 of the SRC, and Section 36.4.3.2 of the 2015 Implementing Rules and Regulations of the SRC.
In another decision, the MSRD also held several stockholders of Abra Mining, namely Ferdinand U. Collado, Leila V. Collado, and Susan May I. Gacelo, Jubileum Air and Sea Logistics Inc., and Andrei Vincent Freight Services Corp., are liable for violations of Section 26 of the SRC.
Float breach
The case stemmed from discrepancies in Abra Mining shares lodged with the Philippine Depository and Trust Corp. (PDTC), which were more than the number of listed, registered, issued and subscribed shares submitted in the company’s filings with the SEC.
The total number of Abra Mining shares lodged with the PDTC totaled 258,957,666,755, whereas the total number of the company’s listed shares in the Philippine Stock Exchange (PSE) was only 72,946,882,574.
Further, the total shares indicated in the company’s latest approved registration statement stood at 95 billion, while the issued and subscribed shares indicated in its corporate documents only totaled 99,294,584,200 and 199,294,584,200, respectively.
Illegal issuances of shares totaling 169.05 billion covering 474 stock certificates were found to have been made from 2015 to 2019. These illegally issued shares were lodged and traded on the PSE in numerous transactions.
Under the RCC, stock corporations have the express and inherent power to issue or sell stocks.
Such power is entrusted to the board of directors, who have a corresponding duty to ensure that the issuance of shares is properly executed by the law.
Had the officers and directors faithfully exercised their duties as imposed by law, they would have prevented the fraudulent scheme from being carried out, the MSRD added.
The MSRD also held that the AR and its officers violated Section 61 of the RCC when it issued shares for less than their par or issued price, given that the company’s financial statements during the pertinent years did not reflect any inflow of cash as proceeds for the issuance of the shares.
As members of the board, James Beloy, Venus, Premy Beloy, Joel Beloy, Gaskell and Tansengco were responsible for the accuracy of the representations in the company’s financial statements.